Thursday, May 5, 2016

Dye-na-flow and The Big Short,

Last evening I did some laundry, cooked some salmon, and downloaded some music while I watched some repeats of Top Gear - the British guys not the Americans.

I decided to crawl into bed and watch The Big Short because the DVD was due back at the library and I didn't want to pay a late charge or not see the movie.
This movie is very complicated. I am still not sure how you can make money on sub-prime mortgage loans failing. The only thing I can come up with is that when the bond rating would go down, then the insurance companies that insured the bond rating would have to pay the investors who owned a stake in the funds that held the sub - prime loans. That is my best guess. Since the companies that rated the bonds lied about the quality of the mortgages in those funds and there ratings were inflated (AAA, AA, A, BBB, etc.), then people were still buying into these funds. It was getting late so I didn't see the end of the movie, but we pretty much know that the whole house of cards collapsed. It was all very complicated.

I did open my package with the Dye-na-flow that I ordered. JoAnn's had a good deal on it so I bought a bunch of colors with the gift card I had.

A couple of weeks ago I tried dyeing some embroidery floss and it didn't come out very good. I thought I would try overdyeing them with the Dye-an-flow.


QuiltSwissy said...

Te Big Short was a great movie We saw it at the Movie Tavern and ate lunch relaxed in a big old easy chair! That is part of it,the insurance. But money was made in several ways. The banks would approve a buyer who really couldn't afford the house. So they would charge a higher rate. the banks were group the high rate mortgages and sell a package of loans to the second level sub-prime buyer. The bank would take less than the total value for a group of instruments to free up money for more loans. Since they bought below value, the subprime buyer made money as they collected. Then they often bundled those in larger groups and sold that off. But when the housing market slowed, the banks still issued mortgages so they would have something to sell, and the buyers had to keep the rating inflated so they could get the insurance, and on and on and on. They sold the same mortgages over and over again.

Until there was nothing but a literal bubble in the center of it all and it collapsed.

I remember when we had a mortgage on several houses and they were sold over and over again. It didn't make sense to me then. but after seeing this movie it made perfect sense.

Vicki W said...

I used to work in the credit card division of a bank where I first heard about the process of securitizing loans. I figured it was squidgy because I could never really understand it. It's all about manipulating the balance sheet.
You can do some sun printing too!